About the WTO
India - Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products
On 15 July 1997 the US requested consultations with India in respect of quantitative restrictions maintained by India on importation of a large number of agricultural textile and industrial products. The US contended that these quantitative restrictions including the more than 2700 agricultural and industrial product tariff lines notified to the WTO are inconsistent with India’s obligations under Articles XI:1 and XVIII:11 of GATT 1994 Article 4.2 of the Agreement on Agriculture and Article 3 of the Agreement on Import Licensing Procedures.
Japan - Measures Affecting Agricultural Products
On 7 April 1997 the US requested consultations with Japan in respect of the latter’s prohibition under quarantine measures of imports of certain agricultural products. The US alleged that Japan prohibits the importation of each variety of a product requiring quarantine treatment until the quarantine treatment has been tested for that variety even if the treatment has proved to be effective for other varieties of the same product. The US alleged violations of Articles 2 5 and 8 of the SPS Agreement Article XI of GATT 1994 and Article 4 of the Agreement on Agriculture. In addition the US made a claim for nullification and impairment of benefits.
United States - Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of one Megabit or above from Korea
On 14 January 1998 the EC requested consultations with Argentina in respect of definitive anti-dumping measures allegedly imposed by Argentina on imports of drill bits from Italy. The EC stated that on 12 September 1998 Argentina imposed definitive anti-dumping measures on imports of drill bits from Italy. The investigation which led to the imposition of these measures had allegedly been initiated on 21 February 1997. The EC alleged that due to the fact that Argentina’s investigation exceeded 18 months it was in violation of Article 1 of the Anti-Dumping Agreement.
Korea - Taxes on Alcoholic Beverages
On 4 April 1997 the EC requested consultations with Korea in respect of internal taxes imposed by Korea on certain alcoholic beverages pursuant to its Liquor Tax Law and Education Tax Law. The EC contended that the Korean Liquor Tax Law and Education Tax Law appear to be inconsistent with Korea’s obligations under Article III:2 of GATT 1994. On 23 May 1997 the US requested consultations with Korea in respect of the same measures complained of by the EC. The US also alleged violations of Article III:2.
The EU Model and Turkey
The customs union between the European Union (EU) and Turkey which entered into force in January 1996 extended and deepened the Association Agreement signed in 1964 and which foreshadows full EU membership for Turkey. In a number of areas the new relationship goes beyond the minimum requirements for a customs union: Turkey is also having to implement a number of measures which are part of the acquis communautaire similar to those applicable within the EU. This paper addresses the question whether this adoption of the EU model is beneficial to Turkey and third countries. The importance of this issue is the spreads of this model through the extension of the EU itself and the building of an increasing web of partnerships between the EU and other countries in Central and Eastern Europe as well as Mediterranean countries. Moreover other regions are looking at the EU model as a way in which to deepen their own preferential trading arrangements.
Developments in trade policy
Since the last WTO Annual Report conditions for trade and trade-related policy-making have become considerably more difficult. The effects of the financial and economic crisis affecting emerging markets and of the economic downturn in Japan are far from fully worked through. They are having a serious impact on the pattern of world economic growth and hence on trade and on commodity markets (Chapter Two). Although there has been some backtracking in trade liberalization the multilateral trading system – as seen in the development of trade policies – seemed in September 1998 to be standing up well to the turbulence in financial and trading markets.
WTO activities
The World Trade Organization (WTO) is the legal and institutional foundation of the multilateral trading system. It provides the principal contractual obligations determining how governments frame and implement domestic trade legislation and regulations. It also serves as the platform on which trade relations among countries evolve through collective debate negotiation and adjudication
Globalization and trade
The year 1998 marks five decades of the multilateral trading system. For 50 years the GATT and now the WTO have provided the framework for the conduct of trade relations in a world of growing complexity and interdependence – a world where trade has increased seventeen-fold since the founding of the system and foreign direct investment has grown five-fold in the last decade alone. At the same time the forces of globalization have brought extraordinary new opportunities. It is true of course that the upward trend in world output and trade has not been even or uninterrupted throughout the post-war period. Indeed there have been times of difficulty and disruption posing serious challenges for policy makers. The current economic crisis affecting much of Asia and Russia and exerting pressure on the economies of many other countries in different regions constitutes one of the most challenging sets of circumstances to have confronted the world economy in many decades. The financial crisis in South-East Asia the recession in Japan slower growth in Asia more generally as well as in various countries in other regions and the economic crisis in Russia have combined to create economic conditions in which the global economy could enter a period of contraction. If judicious policies are brought to bear however calming the fears of investors and restoring stability in the financial sector there is a good chance that while the world economy will suffer slower growth accompanied by a painful adjustment process in some countries a deep global depression is avoidable.
World trade in 1997 and in the first half of 1998
Despite the turmoil in world capital markets the global economy and trade expanded at an outstanding pace in 1997. Both GDP and trade growth were higher in 1997 than at any time in the 1990s. The increasing gap between trade and output growth rates in 1997 together with a further surge in foreign direct investment (FDI) indicate continued integration of national markets into the global economy. Increased integration inevitably means that disturbances in one country or region can have an impact elsewhere – a fact of which the world has become sharply aware in recent months as financial crises and lower growth in Asia have affected economic conditions in other regions. These developments emphasize the need for careful and well-directed policies based on adequate international cooperation. Among the policies that are important in reducing contagion and avoiding a downward spiral in the world economy are the maintenance of open markets for trade the restoration of financial stability and the development of adequate regulatory frameworks in the financial sector.
Overview
Financial and economic turmoil has shaken much of the world in the last few months affecting most of Asia and Russia in particular and presenting new challenges for many other countries. This crisis calls for a sense of collective responsibility as urgently as at any other time in the post-war period. From the perspective of the global trading system this means three things. First it requires a clear and continuing commitment by governments to the multilateral trading system and a firm resolve to resist protectionism. Second a fresh impetus toward trade liberalization would contribute to the resolution of the crisis and would send a positive signal to the markets. Third renewed efforts to bring the countries outside the system including Russia and China into the World Trade Organization would help to complete the global economic architecture for which the need has been so strongly demonstrated.
Annual Report 1998
The Annual report of the WTO focuses on the regular activities of the organization the details of its current structure staff and budget. The Annual report is published in the first half of each year.
Guide to the Uruguay Round Agreements
The Uruguay Round one of the longest and most complex economic negotiations ever undertaken was completed successfully in December 1993. Its results are embodied in nearly 30 legal agreements and a large number of supplementary decisions as well as a large number of highly detailed separate undertakings in which each country specifies the levels of trade restrictions which it promises not to exceed for thousands of different products or services.
Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico
On 15 October 1996 Mexico requested consultations with Guatemala in respect of an anti-dumping investigation commenced by Guatemala with regard to imports of portland cement from Mexico. Mexico alleged that this investigation was in violation of Guatemala’s obligations under Articles 2 3 5 and 7.1 of the Anti-Dumping Agreement.
Financial Services Trade, Capital Flows, and Financial Stability
This study argues that trade policies regarding financial services are an important—but often neglected—determinant of capital flows and financial sector stability. Financial services trade liberalisation which promotes the use of a broad spectrum of financial instruments and allows the presence of foreign financial institutions whilst not unduly restricting their business practices results in less distorted and less volatile capital flows and promotes financial sector stability. The study finds significant evidence in favour of this claim through an empirical analysis of GATS commitments in 27 emerging markets. For example countries which experienced financial crisis during 1991-97 show a combined indicator of financial services trade restrictiveness three times as high (= less favourable for financial stability) as countries without a crisis. The study' s findings have two important policy implications. Firstly liberalising international trade in financial services can be a market-based means to improve the "quality" of capital flows and to strengthen financial systems. This would complement other policies including financial regulation. Secondly even in countries where the financial system is weak and where immediate full-fledged financial sector liberalisation is not advisable certain types of financial services trade could be liberalised as such trade strengthens the financial system without provoking destabilising capital flows.
Japan - Measures Affecting Agricultural Products
On 7 April 1997 the US requested consultations with Japan in respect of the latter’s prohibition under quarantine measures of imports of certain agricultural products. The US alleged that Japan prohibits the importation of each variety of a product requiring quarantine treatment until the quarantine treatment has been tested for that variety even if the treatment has proved to be effective for other varieties of the same product. The US alleged violations of Articles 2 5 and 8 of the SPS Agreement Article XI of GATT 1994 and Article 4 of the Agreement on Agriculture. In addition the US made a claim for nullification and impairment of benefits.
Australia - Measures Affecting Importation of Salmon
On 5 October 1995 Canada requested consultations with Australia in respect of Australia’s prohibition of imports of salmon from Canada based on a quarantine regulation. Canada alleged that the prohibition is inconsistent with Articles XI and XIII of the GATT 1994 and also inconsistent with the SPS Agreement.
United States - Import Prohibition of Certain Shrimp and Shrimp Products
On 8 October 1996 India Malaysia Pakistan and Thailand requested consultations with the United States concerning a ban on importation of shrimp and shrimp products from these complainants imposed by the US under Section 609 of US Public Law 101-162. Violations of Articles I XI and XIII of the GATT 1994 as well nullification and impairment of benefits were alleged.
A Simple Trade Policy Perspective on Capital Controls
This note discusses capital controls using insights from the trade policy literature. It highlights some key issues that have been neglected in the current international debate on capital controls. Capital is tradable in the same way as many goods and services are. As a result much of the analysis pertaining to trade and trade policy in goods and services applies with equal force to capital movements. Free trade is typically the best trade policy no matter whether it is trade in goods services or capital. But if investor behaviour and the prevailing policy environment are not conducive to immediate free trade the choice of instrument for controlling capital flows becomes important. Tariffs and other price-related restrictions are preferable to quantitative restrictions or prohibitions because: (i) they cause less rent seeking and (ii) they do not insulate the domestic market from price changes and innovations in international markets.
Korea - Taxes on Alcoholic Beverages
On 4 April 1997 the EC requested consultations with Korea in respect of internal taxes imposed by Korea on certain alcoholic beverages pursuant to its Liquor Tax Law and Education Tax Law. The EC contended that the Korean Liquor Tax Law and Education Tax Law appear to be inconsistent with Korea’s obligations under Article III:2 of GATT 1994. On 23 May 1997 the US requested consultations with Korea in respect of the same measures complained of by the EC. The US also alleged violations of Article III:2.
Preferential and Non-Preferential Trade Flows in World Trade
This paper quantifies the extent of preferential trade as a share of total world trade in different regions of the world and for two periods. Results show that: i) preferential trade represented 40% of world trade in the period 1988-1992 and it slightly increased to 42% during the period 1993-1997; ii) during the second period agricultural products generally benefited more from the existence of preferential trade agreements than industrial products (maybe due to GATT-exemption); iii) the regional distribution of preferential trade is relatively uneven with a significant share of preferential trade in Western Europe (around 70 per cent) relatively low values in the Western Hemisphere (around 25 per cent) very low shares in Asia and Oceania (around 4 per cent) and average values in the rest-of-the-world (Eastern Europe and Africa); iv) the largest increase in shares of preferential trade between the two periods has occurred in the Western Hemisphere and in Eastern-Europe and Africa; v) at the country level there is an inverted-u-shape relationship between the share of preferential trade and the size and GDP per capita of individual countries; vi) countries which are highly open to trade tend to have a larger share of preferential trade on total trade in the period 1993-1997 suggesting that preferential and non-preferential trade can be seen as complements.